U.S. Bankruptcy Judge John Dorsey has approved FTX’s plan to repay its crypto customers in cash, plus interest, using the assets recovered since the exchange’s collapse. The plan, valued at $16 billion, allows FTX to fully compensate its customers, marking a significant step toward resolving the bankruptcy case.
Details of the Approved Plan
During a court hearing on Monday in Wilmington, Delaware, Judge Dorsey signed off on the wind-down plan. The agreement includes settlements reached with FTX customers, creditors, U.S. government agencies, and liquidators handling the exchange’s non-U.S. operations.
The plan prioritizes reimbursing those customers who were directly impacted by the collapse of FTX first. After these claims are resolved, FTX will begin addressing potentially competing claims from government regulators.
Payout Terms for FTX Customers
FTX’s repayment plan promises to reimburse customers at least 118% of the value in their accounts as of November 2022, the date FTX filed for bankruptcy. However, an official start date for when these payments will begin remains undisclosed.
Asset Sales and Additional Funds
To support the repayment plan, FTX raised additional funds by liquidating various assets, including investments in tech firms like the AI startup Anthropic. FTX called the result a win for creditors, as the asset sales bolstered the recovery efforts.
Despite this progress, the reaction from some customers has been mixed. Many expressed frustration, as they feel FTX’s collapse led them to miss out on the recent crypto market recovery. Some customers even objected to the plan, arguing that their repayments should reflect the recent rise in cryptocurrency values.
Background: FTX’s Collapse and Legal Consequences
FTX filed for bankruptcy in November 2022 after it was revealed that billions of dollars in customer funds had been mismanaged. The company’s downfall culminated in the sentencing of its former CEO, Sam Bankman-Fried, to 25 years in prison in March 2024 for his involvement in the fraud scheme.
